To Rent or to Buy and How to Decide

9/19/2013 9:24AM

Mortgage rates are moving around and housing prices are rising. The perennial question of whether to rent or buy seems more complicated. Jed Kolko, chief economist at Trulia, joins the News Hub to weigh in on the question. Photo: AP

This transcript has been automatically generated and may not be 100% accurate.

... the the ... the tutorial question does it make more sense to buy all reigns ... with you always rates moving around so much ... due to the Fed had to do the talking to this point ... housing prices rising the question seems more complicated ... the next guests who spends a lot of time crunching numbers from the housing market is here tells this still makes a lot of sense to buy ... did Kolko is chief economist at real estate site truly a ... good morning to ... do more to ... do that you're most welcome ... why a ... it could depress prices up by a ... moat asylum would think that all up it's it's it's more specific but bar and bought ... were still that fall behind ... in terms of the buys the crisis that stemmed ... its delightful most is that the conventions process ... it's less affordable to buy this year than it was last year ... prices are up more than ten percent nationally outrage for more than a point ... but we really compare ... the overall cost of buying versus renting taking into account ... your mortgage payment on the other costs of buying like renovations insurance maintenance ... and I expected price appreciation we all ate into account ... at current rates and prices it still looks thirty five percent cheaper to buy than to rent nationally now that's if you stay put for several years ... and how long you stay put ... as a big effect because you can spread your closing costs or more years ... it also depends whether itemizing or tax deductions and one bracket ... and the demand on water Street you can get a word assuming a four point eight percent mortgage rate ... that's a lot higher than last year's rate now ... thirty five percent cheaper ... to buy than to rent nationally ... the year was forty five percent cheaper to buy than to rent Nash said the gap is narrowing ... even though the gap still think ... that is the still seems a good bead estimates that ... loan ... will ... cause rates could go up as well which was to shift around ... but to um what's on Tuesday he mentioned that there is a price appreciation assumptions and of course that was of a fight that assumption to have for the crisis ... what assumptions Uniting and in that regard ... so we use a pretty conservative assumption ... of what will happen with prices we assume that prices will rise on nominal prices not real ... home prices ... will rise between two and three percent the year ... and is much lower than ... the rate which the rising now is slower than the historical average over the past twenty or thirty years one people start out with a conservative assumption ... of price appreciation ... but we also today launched a new calculator which you know don't take our word for these assumptions ... and as much as you want your site ... you can actually putting in ... all of a low price the level of Brent ... and choose your own assumption about price appreciation ... the hat trick you actually the doctor taxes that the more tricky to get ... into for yourself whether mentor of mine makes more sense to the unity looking since rolled out a bit of money ... you know what what do you see happening with which it says it is and what what has been a public response that that the rates rose in advance of this to ... expected between ... then and now ladies and out ... we saw that the rate spike start on in early May which is even before the Fed's June announcement ... that they would ... consider tapering in September to begin prior ... to the June announcement ... no we start saw the beginning of the rate spike know it's like the reach of the higher year from now than they are today ... tapering is still a question of when ... not not if ... and as the economy strengthens ... rates are likely to rise ... high sow prices and rates are both likely be higher in after them they are today ... which will again confusion close that gap ... between the cost of buying the cost of renting ... and we expect to see that some nature of this ... how will tip in favor of renting ... so right now ... if rates get out ... of four to five point two percent ... it would start to be cheaper to rent than to buy in Santa say ... hi if retail with a six percent ... Stephen Sysco in Honolulu also to ... New York tips tight union sevens so ... they're big difference across the country about how much it costs rent versus buy ... and how high rates have to get going on before it starts to make more